A report by the International Monetary Fund (IMF) published on October 23, 2016, stated that the cost of saving the South Korean shipbuilding and shipping companies is approximately US$27.3 billion, reported the Korea Herald.
The conditions of this prediction coming true are that the creditor’s debt restructuring losses reach 5.5 percent to 7.5 percent of GDP alongside along 0.4 to 0.9% of the labour forces employment impact.
Despite the massive cost, the IMF emphasise that total industry restructuring for both shipping and shipbuilding in South Korea would mean a growth in GDP of around 0.5%.
The South Korean economy is heavily reliant on Shipping and Shipbuilding, being home to some of the largest names in the industry including Hyundai, Samsung and the recently doomed Hanjin Shipping.
The report said: “With the slowdown of global trade, the growth rate of Korean corporate earnings, particularly in export-oriented manufacturing and shipping, has been declining and has recently turned the estimated cost of corporate restructuring in the shipping and shipbuilding industries negative. Our method gives that cost at about KRWon31trn ($27.3bn) in the adjusted baseline.”
In mid-October 2016 an ongoing rail strike, in which some 7,000 members of the rail union have stopped work across the country for the third week in a row, halved the country’s rail capacity and severely impacted the ability for containers to move smoothly to and from Korea’s major ports.